Laws of Tenders and Auctions

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LAB PROJECT
REPORT

LAW OF TENDERS AND AUCTIONS

PGPM 2010-12
TERM 1

TABLE OF CONTENTS

1. Auction and tender.……………………………………………………………………………………………………………….......3

2. Auction………………...……………………………………………………………………………………………………………….......3

2.1 Legal Aspect as per The Sale of Goods Act, 1930...............................................................3

2.1.1Legal Rules Regarding Auction.............................................................................3

2.2 Legal Aspect as per The Indian Contract t, 1872................................................................4

2.3 Auction Terminologies…………………………………….................................................................6

3. Tender………………..………………………………………………………………………………………………………………….......6

3.1 Legal Aspect as per The Indian Contract t, 1872................................................................6

3.1.1Acceptance and withdrawal of tenders...............................................................6 3.1.2No Obligation to Accept Lowest Tender..............................................................7 3.2Tenders Terminology……………….………….………..................................................................8

3. Judicial Pronouncements and Analysis………………………………...........................................................9

3.1Auction…………..………………………………….............................................................................9

3.1Tender.…………..…………………………………............................................................................13

7. References.....……………………………………………………………..................................................................17

1. AUCTION AND TENDER
Auction and Tender are two significant modalities by which business contracts are formed. As these are transparent form of doing business, the Government institutions almost always work through tenders. The Government uses this means for getting into contract with private parties, infrastructure development projects etc. Unlike Government tenders, which are put up to public at large, private business send tender notice to a limited number of pre identified parties. Tender and auctions are similar. The law on auction got developed first.

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2. AUCTION
An auction is a process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder. In an auction, the bidder offers and the auctioneer accepts. The auctioneer is free to turn down the highest bid. And the highest bidder, before the bid is accepted, is free to withdraw the bidder.

3.1. Legal Aspect as per The Sale of Goods Act, 1930

The Sale of Goods Act, 1930 (Sec 64), makes provisions on sale by auction. The Sale of Goods Act is an act to define and amend the law relating to the sale of goods. In an auction sale, the auctioneer invites bids from prospective buyers and the sale is made to the person who makes the highest bid. The auctioneer may be the seller himself or his authorized agent. Prior to actual auction, wide publicity is given and intending buyers are informed of the time and place of auction. The notice of auction is merely an invitation to the public to make offers. It is not an offer to sell.

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2.
3.1.
3.2.1. Legal Rules Regarding Auction Sales (Sec 64)

* Goods put up for sale [Sec 64(1)]: When goods are put up for sale in lots, each lot is prima facie deemed to be the subject of a separate contract of sale. * Completion of sale [Sec 64(2)]: The sale is complete when the auctioneer announces its completion by the fall of the hammer or in other customary manner; and, until such announcement is made, any bidder may retract his bid. * Reservation of right of seller [Sec 64(3)]: A right to bid may be reserved expressly by or on behalf of the seller...
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